An unexperienced accountant prepared the following trial balance of Bang Vikas Ltd., for the year ending 31.12.2005. The cash in hand on 31.12.2005 was Rs 750.
Details
Rs
Details
Rs
Depreciation on machinery
33,000
Authorised Capital: 60,000 shares of Rs 10 each
6,00,000
Calls in Arrear
7,500
Subscribed Capital
4,00,000
Land and Buildings
3,00,000
6% Debentures
3,00,000
Machinery
2,97,000
Profit and Loss Account (Cr.)
13,625
Interim dividend paid
37,500
Sundry Debtors
87,000
Stock on 1-1-2005
75,000
Sales
4,15,000
Sundry Creditors
40,000
Sinking Fund
75,000
Bills Payable
38,000
Preliminary Expenses
5,000
Furniture
7,200
Bank Balance
39,900
Purchases
1,85,000
Provision for Bad Debts
4,375
Investments
75,000
Salary and Wages
99,300
Repairs
4,300
Fuel
2,500
Rates and Taxes
1,800
Travelling Expenses
2,000
Discounts
6,400
Director’s Fees
5,700
Bad Debts
2,100
Debenture interest
9,000
Carriage
1,800
Freight
8,900
Sundry Expenses
2,350
Public Deposits
10,000
12,95,625
12,95,625
After locating the mistakes and making the following adjustments prepare trading and profit and loss account and balance sheet in the prescribed form.
Adjustments: (i) Stock on 31.12.2005 Rs 95,000 and (ii) Write-off preliminary expenses.
An unexperienced accountant prepared the following trial balance of Bang Vikas Ltd., for the year ending 31.12.2005. The cash in hand on 31.12.2005 was Rs 750.
| Details | Rs | Details | Rs |
| Depreciation on machinery | 33,000 | Authorised Capital: 60,000 shares of Rs 10 each | 6,00,000 |
| Calls in Arrear | 7,500 | Subscribed Capital | 4,00,000 |
| Land and Buildings | 3,00,000 | 6% Debentures | 3,00,000 |
| Machinery | 2,97,000 | Profit and Loss Account (Cr.) | 13,625 |
| Interim dividend paid | 37,500 | Sundry Debtors | 87,000 |
| Stock on 1-1-2005 | 75,000 | Sales | 4,15,000 |
| Sundry Creditors | 40,000 | Sinking Fund | 75,000 |
| Bills Payable | 38,000 | Preliminary Expenses | 5,000 |
| Furniture | 7,200 |
|
|
| Bank Balance | 39,900 |
|
|
| Purchases | 1,85,000 |
|
|
| Provision for Bad Debts | 4,375 |
|
|
| Investments | 75,000 |
|
|
| Salary and Wages | 99,300 |
|
|
| Repairs | 4,300 |
|
|
| Fuel | 2,500 |
|
|
| Rates and Taxes | 1,800 |
|
|
| Travelling Expenses | 2,000 |
|
|
| Discounts | 6,400 |
|
|
| Director’s Fees | 5,700 |
|
|
| Bad Debts | 2,100 |
|
|
| Debenture interest | 9,000 |
|
|
| Carriage | 1,800 |
|
|
| Freight | 8,900 |
|
|
| Sundry Expenses | 2,350 |
|
|
| Public Deposits | 10,000 |
|
|
|
| 12,95,625 |
| 12,95,625 |
After locating the mistakes and making the following adjustments prepare trading and profit and loss account and balance sheet in the prescribed form.
Adjustments: (i) Stock on 31.12.2005 Rs 95,000 and (ii) Write-off preliminary expenses.
Bang Vikas Ltd
Profit and Loss Account for the year ended December 31, 2005 | ||||||||
Dr. | Cr. | |||||||
Expenses/Losses | Amount Rs | Revenues/Gains | Amount Rs | |||||
Opening Stock |
| 75,000 | Sales |
| 4,15,000 | |||
Purchases |
| 1,85,000 | Closing Stock |
| 95,000 | |||
Fuel |
| 2,500 |
|
|
| |||
Carriage |
| 1,800 |
|
|
| |||
Freight |
| 8,900 |
|
|
| |||
Gross Profit c/d |
| 2,36,800 |
|
|
| |||
|
| 5,10,000 |
|
| 5,10,000 | |||
|
|
|
|
|
| |||
Salary and Wages |
| 99,300 | Gross Profit b/d |
| 2,36,800 | |||
Repairs |
| 4,300 |
|
|
| |||
Rates and Taxes |
| 1,800 |
|
|
| |||
Travelling Expenses |
| 2,000 |
|
|
| |||
Discounts |
| 6,400 |
|
|
| |||
Director’s Fee |
| 5,700 |
|
|
| |||
Bad Debts |
| 2,100 |
|
|
| |||
Debenture Interest | 9,000 |
|
|
|
| |||
| Add: Outstanding | 9,000 | 18,000 |
|
|
|
| |
Sundry Expenses |
| 2,350 |
|
|
| |||
Depreciation on Machinery | 33,000 |
|
|
| ||||
Preliminary Expenses written off |
| 5,000 |
|
|
| |||
Net Profit c/d |
| 56,850 |
|
|
| |||
|
| 2,36,800 |
|
| 2,36,800 | |||
|
|
|
|
| ||||
Interim Dividend Paid |
| 37,500 | Balance b/d |
| 13,625 | |||
Balance c/d |
| 32,975 | Net Profit of the Current year | 56,850 | ||||
|
| 70,475 |
|
| 70,475 | |||
|
|
|
|
|
| |||
Balance Sheet as on December 31, 2005
| |||||||
Liabilities | Amount Rs | Assets | Amount Rs | ||||
Share Capital |
| Fixed Assets |
|
| |||
Authorised Capital: 60,000 shares of 10 each |
|
| Land and Buildings |
| 3,00,000 | ||
6,00,000 |
| Machinery | 3,30,000 |
| |||
|
|
|
| Less: Depreciation | 33,000 | 2,97,000 | |
Issued and Subscribed: |
|
| Furniture |
| 7,200 | ||
4,000 shares of Rs 10 each |
| Investments |
|
| |||
| Fully Called up | 4,00,000 |
|
| Investments |
| 75,000 |
| Less: Calls in Arrear | (7,500) | 3,92,500 |
|
|
|
|
Reserve and Surplus |
| Current Assets, Loan and Advances |
| ||||
| Sinking Fund | 75,000 | Current Assets: |
|
| ||
| Profit and Loss | 32,975 |
| Sundry Debtors | 87,000 |
| |
Secured Loans |
|
| Less: Provision for Bad debt | 4,375 | 82,625 | ||
6% Debentures | 3,00,000 |
| Stock |
| 95,000 | ||
Unsecured Loans |
|
| Bank Balance |
| 39,900 | ||
| Public Deposits | 10,000 |
| Suspense A/c (Difference of the Trial Balance) | 750 | ||
Current Liabilities and Provisions |
|
|
|
|
| ||
A. Current Liabilities |
|
|
|
|
| ||
| Sundry Creditors | 40,000 |
|
|
|
| |
| Bills Payable | 38,000 |
|
|
|
| |
| Outstanding Debenture Interest | 9,000 |
|
|
|
| |
B. Provisions |
|
|
|
|
| ||
| 8,97,475 |
|
|
| 8,97,475 | ||
|
|
|
|
|
| ||
Working Notes:
Rectified Trial Balance
| |||
Particulars | L.F. | Debit Amount Rs | Credit Amount Rs |
Subscribed Capital |
|
| 4,00,000 |
6% Debentures |
|
| 3,00,000 |
Profit and Loss (Cr.) |
|
| 13,625 |
Sales |
|
| 4,15,000 |
Sinking Fund |
|
| 75,000 |
Depreciation on Machinery |
| 33,000 |
|
Sundry Creditors |
|
| 40,000 |
Bills Payable |
|
| 38,000 |
Provision for bad debts |
|
| 4,375 |
Preliminary Expenses |
| 5,000 |
|
Sundry Debtors |
| 87,000 |
|
Call in Arrear |
| 7,500 |
|
Land and Building |
| 3,00,000 |
|
Machinery |
| 2,97,000 |
|
Interim Dividend Paid |
| 37,500 |
|
Stock on 1-1-2005 |
| 75,000 |
|
Furniture |
| 7,200 |
|
Bank Balance |
| 39,900 |
|
Purchases |
| 1,85,000 |
|
Investments |
| 75,000 |
|
Salary and Wages |
| 99,300 |
|
Repairs |
| 4,300 |
|
Fuel |
| 2,500 |
|
Rates and Tax |
| 1,800 |
|
Travelling Expenses |
| 2,000 |
|
Discounts |
| 6,400 |
|
Director’s Fees |
| 5,700 |
|
Bad debts |
| 2,100 |
|
Debenture Interest |
| 9,000 |
|
Carriage |
| 1,800 |
|
Freight |
| 8,900 |
|
Sundry Expenses |
| 2,350 |
|
Public Deposit |
|
| 10,000 |
Total |
| 12,95,250 | 12,96,000 |
Difference of the Trial balance |
| 750 |
|
|
| 12,96,000 | 12,96,000 |
|
|
|
|